Parametric Estimation of  Conditional  Water Demand Function in Iran’s Manufacturing Sector

Shahiki Tash, Mohammad Nabi; MOSAVI, HANIYE; KHAJE HASANI, MOSTAFA

doi:10.30473/indeco.2021.54811.1183

Document Type : applicative

Authors

¹ Associate Proffesor of Economics,University of Sistan and Balouchestan,Zahedan, Iran

² MA of Industrial Engineering, Azad University,Zahedan, Iran

³ Ph.D. Student of Agricultural Economics, University of Sistan and Balouchestan,Zahedan, Iran

https://doi.org/10.30473/indeco.2021.54811.1183

Abstract

Water shortage in Iran is one of the main restriction on development of economic activity in the coming decades. The main purpose of this study is to estimate water demand function in Iran’s manufacturing industries using Translog cost function. Iran’s manufacturing industries data from 2004 to 2014 is used for this purpose. The results show all the Allen partial elasticities are correctly negative as expected. In other words, the inverse relationship between price and demand quantities is approved. All price elasticities have negative sign as expected and also the water price elasticity is greater than the price elasticities of other inputs in absolute value which means the sensitivity of water demand to price changes is higher than other inputs. Energy, capital and labor ranke 2^nd , 3^rd and fourth in term of price elasticity. The absolute value of all input price elasticities are smaller than one and therefore the demand for all inputs is inelastic. The value of all Morishima elasticities are positive which indicate that the inputs are sudstitution. Based on the research findings and especially considering that the price elasticity of water input is about one, it seems that pricing policies will not effectively reduce water demand in manufacturing sector.

Keywords

20.1001.1.24767077.1399.4.11.2.0

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Journal of Industrial Economics researches

Parametric Estimation of Conditional Water Demand Function in Iran’s Manufacturing Sector

References

References

Volume 4, Issue 11
April 2020
Pages 25-38

Parametric Estimation of Conditional Water Demand Function in Iran’s Manufacturing Sector

References

References

Volume 4, Issue 11April 2020Pages 25-38

Volume 4, Issue 11
April 2020
Pages 25-38